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'°''' ' A53 TWELVE LETTERS ^^' 



ON 



THE FUTURE 



New York 



BY 



GEO. H. ANDREAA^S 



NEW YORK: 

MARTIN B. BROWN, PRINTER AND STATIONER, 

(,J- 20I, 203 & 2bs William Street. 'tt'X 

mm ^'^^' S^-Sf 

m^m^^^^--^- : -^^-: ^'jm^^wp^. 



TWELVE LETTERS 



ON 



THE FUTURE 



OF 



New York, 



BY 



GEO. H. ANDREWS 



NEW YORK: 

MARTIN B. BROWN, PRINTER AND STATIONER, 

Nos. 201, 203 & 205 William Street. 

1877. 



«N EXCHANOS 

VVis. Hist.Soo, 

20 i '05 



in 

o 



^ THE FUTURE OF NEW YORK, 



(f> 



LETTEK I. 

HOW NEW Tt)KK ACQUIRED SUPREMACY STEAM AS A LEVELER. 

To the Editor of the New York Times : 

In complying with your request to present my views as to 
the outlook of affairs, I beg to say that I am not animated by 
any rash desire to rush in where wiser men would fear to 
tread. The situation is one full of difficulties, before which 
bold men quail. It is a time for plain talk, calm thought, and 
decisive action. 

It is a sweet use of adversity when it is accepted as a 
schoolmaster teaching lessons of wisdom. For nearly four 
years New York has lain in the very ashes of adversity. Ev- 
ery trade, every calling, every man has felt its chilling touch. 
And now on all sides is heard the inquiry, is the daylight at 
hand^is there hope in the future? This trial of adversity has 
not been limited to the area of our own city, State, or land. 
With more or less intensity it has extended as far as civiliza- 
tion extends. I do not propose to discuss in any general way 
its causes or its cure, but to deduce some practical lessons for 
the admonition of the people of this city, and to make some 
practical suggestions which may inspire the despondent with 
hope, that they may endure the present with fortitude and be 
animated to new achievements and new successes. 

It is to be accepted as a truth that New York is no longer 
endowed by natural advantages ^vith the commercial supremacy 
which crowned her by di\ane right as the empress of trade 
upon this continent. Her proximity to the ocean, always and 
easily accessible by sailing-vessels ; her facility for reaching the 
interior by the Hudson River, and the exclusive possession by 
the State of a depression in the Alleghany range, which af- 



forded easy egress to the West, were natural advantages sucli 
as no other city upon the Atlantic coast enjoyed. The Erie 
Canal emphasized and supplemented these natural advantages, 
and gave the commerce of the city an impulse which sent the 
population from 123,000, in 1820,' to 202,000 in 1830. 

For long years after this the merchants and traders of Xew 
York had no other care than to gather the harvest which each 
returning season brought to their coffers ; to take toll of the 
products of foreign nations and the great West, which found 
ingress and egress by her gates. While huge wagons, drawn by 
six or eight horses, were painfully climbing the heights of the 
Alleghanies with three or four tous of freight to or from Phila- 
delphia or Baltimore, a canal-boat, drawn by a single horse, con- 
veyed to New York 10 or 20 times the weight and bulk borne 
by the wagon. This city had no competitor, and feared 
none, and complacency was the prevailing mood of her merchants. 

This complacency was first shocked by the solid and far- 
seeing men of Boston, who determined at any cost to secure a 
portion of the Western trade, and the railroad from Boston to 
Albany was the outcome of that determination. The Cunard 
line of steamers, with Boston as the American terminus, was 
also a thorn in the flesh of this complacency, which compelled 
the recognition of the then appalling fact that there could be 
such a thing as competition ; and under the influence of this 
spur the Hudson River Railroad was constructed, and jSTew 
York was again supreme — at least for a time. But the old 
mood of complacency was never again so fully indulged, 
although to this day it prevails in a degree which has wrought 
some e^als and threatens others. 

During these halcyon days, while merchants were exclusively 
engaged in gathering gains, the government of the city was 
given over almost wholly to politicians. The former were so 
well content with their gains that they rarely complained, even 
when the latter appropriated an immoderate share of those 
gains. 

Other cities, less alert than Boston, at last concluded to 
follow her example and attempt to secure a share of the 



Western trade. Steam was the agent to equalize the advan- 
tages of contending and competing cities. The proximity of 
New York to the ocean was, as an advantage, neutralized when 
steamships vexed the Delaware and the Chesapeake. Tlie 
more difficult grade of the Alleghanies at the approaches to 
Philadelphia and Baltimore was to a large extent a question 
of fuel, and that was cheaper upon the lines of the roads 
encountering the heavier grades than upon the lines in this 
State, and so it has come to pass that the supreme advantages 
which 'New York long enjoyed by a divine right or gift of 
nature, and in later years by artificial water-ways connecting 
the Hudson with the lakes, have ceased. Supremacy has 
yielded to equality, steam being the leveler. 

That which costs most is prized most. The advantages which 
New York enjoyed cost nothing. They were nature's endow- 
ment. The Erie Canal cannot be said to have cost the State 
anything, so ample were its revenues for more than a 
generation. Philadelphia and Baltimore, on the contrary, have 
bought their equality at a great price, and that equality 
they mean to maintain, and, if possible, acquire a degree of 
supremacy. In those cities there is no sentiment of compla- 
cency, it is all competition, rivalry, expectancy. This feeling 
pervades all classes, from the merchant to the laborer. They 
strip themselves of every impediment as for a race - a race in 
which they have gained great advantage, and in which they 
hope and mean to win. 

While it is true that these cities have greatly gained, it is 
also true that New York has not greatly lost. A vessel does 
not cease to move when the propelling force has ceased to act. 
An insolvent house of long standing enjoys credit after the 
line of solvency has been passed. A great city will maintain 
its trade by the mere force of momentum, long after adverse 
influences, hostile to its prosperity and destined to work its 
ruin, become active. But the momentum resulting from the 
spent energy of forces is a feeble dependence, and must be 
supported by new agencies, or the end must come. This does 
not yet truthfully portray the condition of New York. It is 



not so bad as that. Still a city of great resources, and of vast 
possibilities, lier energies are at present hampered, and her 
future darkened by circumstances yet controllable. Samson is 
not wholly shorn, or quite blind. 

In other letters I hope to point out some of those circum- 
stances, and perhaps suggest some methods of controlling 
them. 



LETTEK II. 

CHANGES IN LINES OF TRADE— NECESSITY EOE ADAPTATION TO 
CHANGE — VALUE TO THE COMMUNITY OF A MIDDLE CLASS. 

The great Northwest is, in a certain sense, the offspring of 
the State of New York. The means of communication de- 
vised by the genius of Clinton, and made effective by the 
munificence of this State, peopled some of the States whose 
stars adorn our flag, which have, in turn, become the mothers 
of States. As parents sometimes see their children rise about 
them more stalwart and comely than themselves, so some of 
these newer States have within their borders cities which have 
attracted a portion of the business which was formerly a 
feature of the trade of this city. Thirty years ago merchants 
and traders from every section of the country came to New 
York to purchase their goods. Here credits were easier, stocks 
larger, and prices lower than elsewhere ; and the " jobber," as 
he is called— that is, the dealer who stands between the im- 
porter and commission merchant, and the retailer — needed a 
spacious, and attractive store, carried a large and varied stock 
of goods, and employed a multitude of assistants to conduct 
his business. The purchaser came a long distance, at a large 
expense, and bought a year's supply. The winter w^as a close 
season, for then navigation was sealed. To-day, New York is 
no longer the centre of the jobbing trade. It is, to be sure, 
the centre of a jobbing trade, but that is a home, or near-by 
trade. Cleveland, Chicago, Cincinnati, St. Louis, and many 
minor cities, are now each jobbing centres, dealing directly with 
the retailers within their respective spheres. In some of these 



cities, too, are found importers, and commission-houses estab- 
lished by Eastern manufacturers. 

" Times change, and men change with them," and if the 
men don't change, so much the worse for them — they will be 
left behind in the keen competition of life, and drift, wrecks 
upon the strand. So, doubtless, thought the controlling mind 
in the house of A. T. Stewart & Co. when it decided to estab- 
lish a branch in Chicago. Choice did not dictate this, con- 
venience did not, but necessity did, and the men changed their 
policy with the times, in verification of the adage. Here, 
again, supremacy gives way to equality, and New York is 
checked in her growth in the line indicated. 

As in morals, one who hesitates is lost, so in business the 
city which hesitates, falters, and is dismayed, is in peril. He 
is the successful man who in the course of a large experience 
has versatility enough to adapt himself to new circumstances 
and new relations. See the great Astor, ready for any emer- 
gency, dismayed by no disaster, surrendering to no defeat. 
Full of latent reserved power, he seemed to court difficulties 
to triumph over them. So, too, witli Yanderbilt ; as skipper 
of a periagua he was daring and successful. When sucli craft 
were superseded by steamboats, he adapted liimself to the new 
conditions, and excelled ; when the steamboat surrendered to 
the railway, he did not surrender, but seized the railway, con- 
trolled it to his uses, and again excelled. Communities cannot 
adapt themselves to changed conditions with the alertness of 
individuals, for a ship cannot turn in so small a circle as a 
yawl. 

Kow, there are communities and communities. The com- 
munity of New York is essentially different from the com- 
munities of Boston, Philadelphia, and Baltimore, and the 
comparison is not favorable to New York. The local senti- 
ment, not easy to define, but always alert, potential, and de- 
fiant, which prevails in the cities named, is lacking here. This 
sentiment, in its last analysis, is profoundly selfish, not as to 
the individual so much as to the community, but it is also pro- 
digiously effective. The commercial creed of the Baltimorean 



begins with : " I believe in the Baltimore and Ohio Railroad," 
and with that it ends. The Philadelphian, in like manner, be- 
lieves in the Pennsylvania Hailroad. And these creeds include 
the infallibility, impeccability, and invincibility of the respect- 
ive roads. It must be admitted that this devotion is reciprocal, 
and these roads are loyal to the interests of the communities 
they serve. The New-Yorker believes in nothing but that 
New York is a great city, with great natm-al advantages, which 
will in some mysterious way work out for his city a great des- 
tiny. He ignores forces working silently against his city. He 
disdains to note symptoms — not of decay exactly — but say of 
arrested development. He has not discovered that natural ad- 
vantages have been neutralized by the equalizing agency of 
artificial advantages, as described in a former letter. 

The absence of this pervading sentiment of local pride, 
which unifies a community, is chiefly owing to the fact that 
there is in New York no middle class to serve as a connecting 
link between the rich and the poor ; a class solid, substantial , 
and intelligent ; anchored to their homesteads ; diligent in their 
business, and keenly sensitive to the interests of the city they 
inhabit, respected by the rich, and confided in by the poor. 
Such a class is an enormous force in a community ; conserva- 
tive in all that pertains to law and order; watchful over every 
interest of their city, and aggressive in everything that will 
promote the welfare of their municipality. This class may be 
somewhat sordid, if you please ; but even this makes them an 
effective class ; for, as a great British statesman has said : " The 
love of lucre, though sometimes carried to a ridiculous — some- 
times to a vicious — excess, is the grand cause of prosperity to 
all States." I do not mean to say that there are no individuals 
of this class here, for there are many, but not a sufficient num- 
ber, compared with the entire population, to constitute a class 
exercising a powerful or controlling influence in affairs. 

That New York has grown until recently more rapidly than 
competing cities, is another fact that accounts for the lack of a 
sentiment of local pride and supreme devotion to local inter- 
ests. This rapid increase has been chiefly due to immigration. 



9 

not alone from foreign countries, but from other States of this 
country. Wliitlier the middle class have gone, and why they 
went, and why those who come hither from other States do 
not take root here as they should, may he hereafter considered. 
It is gratifying to know that there has, within a year or 
two, been developed something of this sentiment of local 
pride and devotion to local interests. It comes none too soon, 
and it is to be hoped that it will increase in intensity and 
volume. Its spring is self-interest — always an effective motor — 
and its results, if it shall possess the gift of continuance, and be 
wisely applied, will promote the general welfare by giving the 
business interests of our city a new impulse ; so that, instead of 
weakly surrendering the crown of connnercial supremacy to 
any rival, it shall be proved that " he that wrestles with us 
strengthens our nerves, and sharpens our skill." 



LETTEE III. 

TMPOKTANCE OF THE GRAIN TRADE NEED OF TERMINAL FACILI- 
TIES RAPID TRANSIT — INFLUENCE OF ELEVATORS LABOR 

STRIKES THE BROOKLYN BRIDGE. 

The transportation to the seaboard of the products of the 
West is the immediate and ostensible prize for which rival 
cities are contending. It is believed that the city which secures 
this, or much, or most of it, will have various other things of 
vast commercial value added to it. The port must be fre- 
quented by vessels to convey these products abroad, capital 
must be lodged for purchases and expenses, supplies and re- 
pairs to shipping must be provided, labor to handle must be 
employed, towage and pilotage must be paid. To some extent 
imports will pursue the line of exports, and furnish new ele- 
ments and sources of traffic and gain. Indeed, one New York 
house, extensively engaged in importing, is arranging to re- 
ceive a portion of its merchandize through a branch in Balti- 
more, and another is receiving a large portion of its foreign 
goods througli lM)ston. Cargoes of coffee, when destined for 



10 

the West, are landed at Baltimore almost exclusively. That 
port which can receive, deliver, and handle exports most ra- 
pidly and most cheaply will retain or obtain this prize. It is a 
question of dollars — no, not of dollars, but of cents and mills. 
Upon such small issues — small in detail — hangs the question 
of ultimate commercial prosperity, possibly commercial su- 
premacy. 

And here New York is at a disadvantage. The cargo and 
the ship must be brought together with the least possible delay 
and at the least possible cost. At present the cost of handling 
the products here is greater than elsewhere, and this city loses 
a portion of lier trade. Some of our dealers have followed the 
trade to another city, while the others are waiting for a prac- 
tical solution of the problem as to cargo and ship. There is 
need of wise counsel and early action. There is a leak, and it 
must be stopped. Bankers tell me that they find the current 
of certain lines of Western financial accounts changing ; they 
go West to find the cause, and are told the business is transferred 
to another city because of terminal expenses and delays here. 
So closely are business interests interlocked that no link in the 
chain can be jarred without a responsive shock to the whole. 
This blending of everj^ interest in the common welfare renders 
it in the last degree imwise for any to assume that it is too 
remote to be injured by im})eding effective measures for assur- 
ing facilities for transhipment of produce. 

The subject of rapid transit within the city limits is one 
which cannot be passed by. It is hoped that the time is at 
hand when it will possess the qualities of a commanding inter- 
est. In 1866, as Chairman of a special commission to investi- 
gate the subject, I devoted several months to a careful examin- 
ation, and the conclusion then arrived at — that underground 
railways passing under streets would best provide for the wants 
of the city in resj^ect to the safe, rapid, and cheap transportation 
of persons and property — seems a sound one. The Fourth 
avenue subway has been a very long step in the direction 
indicated. 

Elevated roads have their advocates, and undoubtedly their 



11 

merits. Rapid transit roads need a population upon or near 
their lines. It is alleged with much force that the road must 
precede the inhabitants ; that it must be built, in fact, to make 
remote property habitable. On the other hand, it is urged 
with ecjual force that such a road cannot be constructed without 
injury to valuable property in the improved portion of the city, 
and that the damage to improved property is immediate and 
absolute, while the advantage to distant property is remote and 
contingent. 

Curiously enough, wdiile this controvers}^ is pending, a 
method of rapid transit has come into vogue which is of inter- 
est in this connection. Perpendicular rapid transit has an 
important bearing upon horizontal rapid transit. If the man 
who makes two blades of grass grow^ upon a spot of ground 
where only one grew before is a benefactor of his race, what 
shall be said of the man who, in effect, makes two houses stand 
where only one stood before ? The elevator is the vehicle which 
effects this result. Until within two or three years the third story 
was as near the sky as it was possible to induce the better class 
of tenants to go, but the steam elevator makes the fifth and even 
the sixth accessible and habitable, and the difference in rents 
between the several floors, where this vehicle is in use, is sur- 
prisingly small. It has become possible, then, to accommodate 
within a given area a population much more dense than could be 
housed without this agency. Should the erection of lofty 
dwellings, flats as they are called, continue to meet with favorj 
the occupation of unimproved lots must proceed at a slower 
rate, and the improvement of those more remotely situated be 
in some degree retarded. The influence of the steam elevator 
upon down-town property admits of no question. Certain call- 
ings w^hich are especially gregarious And it possible to keep 
within the coveted area by occupying the now accessible lofty 
stories. Indeed, the upper stories of ordinary buildings down- 
town, without elevators, are not easily rented. 

That rapid transit in some effective form will come is certain. 
It will be indispensable for a full development of the territorial 
resources of the city. The conformation of Manhattan Island 



12 



in itself will impose the necessity of providing means of speedy 
transit. Yet it is possible, if New York shall persist with Bour- 
bon-like obstinacy in certain methods, and resist certain reforms, 
that the urgent necessity for rapid transit may be postponed. 

Incidentally it may be remarked that labor-strikes have 
worked an injury to the city. While ship-building was yet 
a profitable calling it was driven from the city by strikes. 
These, however, are not peculiar to New York, but here their 
frequency and intensity are augmented by the facilities for 
organization afforded by the density of the population. In the 
contest between labor and capital, strikes will continue to occur. 
They are incident to the law of supply and demand growing 
out of a high state of civilization. They are the result of fric- 
tion in the social machinery, for which those civil engineers of 
society, known as political economists, have not as yet been 
able to propose an adequate remedy. They must be referred 
to the good sense and forbearance of those immediately con- 
cerned. 

The Brooklyn Bridge is a magnificent conception, and of 
the highest possible importance — to Brooklyn. It is an enter- 
prise to which New York is committed beyond recall, so that 
its expediency, from a New York point of view, is quite beyond 
the pale of discussion. Wlien, in the future. New York shall 
have demonstrated an ability to govern herself wisely and well, 
the question of the union of the two cities may become a prac- 
tical one ; until then the bridge will be one of sighs to the 
New York tax-payer. It was a singular auomaly to see, recently, 
an annoimcement of the issuing of bonds to build the bridge to 
Brooklyn, and an announcement that a bridge connecting one 
part of New York with another was closed because of its 
insecure condition. The very fact, however, that this city is 
pledged to this vast undertaking should add urgency to the 
efforts to reinforce the resources of the city, by removing every 
hindrance to the fullest development of her powers. 



13 



LETTER IV. 

DEBT THE CAUSE OF HIGH TAXATION NECESSITY FOK REDUCING 

EXPENSES REAL ESTATE AND RENTS, 

Debt and taxation are a load nnder which New York is 
staggering. Debt, State and municipal, is placed before taxa- 
tion because debt is in great part the cause of the excessive 
rate of taxation which is now the source of complaint, and is 
regarded as withering the energies and checking the growth of 
the city. The actual increase in the current expenses of the 
city in proportion to the value of the property is really not 
very great, as compared with a period twenty years ago. For 
instance, in 1857 the rate of taxation for current expenses was 
$1.13 upon $100, and in 1876 the rate for the same purposes 
was $1.30 upon $100. This statement will be regarded by 
many as incredible, so a few figures by way of proof. The 
rate for 1857, for all pui-poses, was $1,556-1. From this deduct 
the interest upon the debt, $1,311,813, and the State tax of 
If mills upon the assessed value, $895,515, and it gives a rate 
of $1.13. In 1876 the rate for all purposes was $2.80. From 
this deduct the interest upon the debt, $9,503,189, and the 
State tax, $7,233,189, and it gives a rate of $1.30. 

Now, do not let me be considered as in anywise the apologist 
for the current extravagance. The city debt is immense, and 
it is tlie product of extravagance, recklessness, and dishonesty. 
But, there it is, and it has to be met honestly and carried man- 
fully- The State tax has been enormous, and this city has 
paid in the past 10 years $64,014,204 in that direction. For- 
tunately, it is now subsiding, and the city will pay f(jr that 
charge in 1877 less than in any year since 1867. The building 
mania, which has cost the State so largely during the past few 
years, no longer prevails, and it is hoped that the good sense of 
the Legislature will permit no large appropriations this year. 
The interest upon the city debt must be paid, and for the 
present, at the fixed rate of interest. It is possible, however, 
under certain conditions, to be hereafter named, that the rate 
of interest may be reduced, and so that burden lightened. 



14 

Tliere reiiiaiii, then, only the current expenses of the city 
in which immediate, or very early retrenchment, is possible. 
Then in that dii-ection mnst the knife of retrenchment be 
applied. Can it be done 'i It can. It will hurt ; but so does 
the surgeon's knife. The body politic is in peril, in extremity, 
and the fact must be recognized. Resolution and courage are 
needed to apply this remedy, but they ought not to be wanting. 

The Board of Estimate and Apportionment is the final 
arbiter in fixing so much of city expenses as is under local 
control. Legislative restrictions, so far as they relate to the 
minimum compensation for services, should be removed, still 
restricting the maximum. The composition of the Board of 
Apportionment should be chaiiged. The Mayor and President 
of the Board of Aldermen should remain, but the head of one 
department should not be called upon to fix the appropriation 
for other departments. It is an invidious duty. The gentle- 
men who fill those positions now well know that this suggestion 
is not made from any distrust of their ability or integrity. 
They would, I doubt not, esteem it a privilege to be released. 
The Board should consist of five, three of whom might be 
selected respectively by the resident members of one year's 
standing, of the Chamber of Commerce, tlie Bar Association 
and the Produce Exchange, and commissioned by the Mayor, 
from amongst citizens who for two years preceding have been 
the owners of real estate of the assessed value of at least 
$25,000. These gentlemen should be ineligible for any local 
office to which a fee or salary is affixed for two years after 
their terms as members of this Board have exj)ired, and should 
be prohibited from recommending or procuring the appoint- 
ment of any person to a local office during their term of office. 
The term of one of them should expire each year. A 
Board so composed would give to the real estate interest the 
importance and control to which it is so well entitled. 

The fact that this city could, as already stated, pay for a 
State tax in ten years the enormous sum of more than 
$60,000,000 from taxation — equal to more than half the city 
debt — is a proof of the wonderful vitality of the city; a 



15 

vitality, however, wliicli must not be too much strained or pre- 
sumed upon, or a collapse may ensue. A large portion of this 
State tax was to meet the bounty debt, and probal)ly none of 
that vast sum was for any pm-pose which increased the taxable 
resources of the city. 

In the general depression which, for nearly four years, haa 
affected every interest in the country, )-eal estate has not 
escaped. Yet other investments have proved less reliable than 
those in real estate. The owner of unincumbered real prop- 
erty in this city may have reason to complain of a diminished 
income from reduced rents, and of high taxes, but still hi& 
condition is far better than that of those who hold securities 
which have defaulted in the payment of interest, or stocks no 
longer paying dividends, the capital of which has, in some 
cases, disappeared. The diminished compensation paid to 
those employed, and the enforced idleness of many out of em- 
ployment, has led to a condensation of tenants in the one case, 
and a total stoppage of rents, very often, in the other. That 
is to say, families who formerly occupied an entire house have 
been compelled to put themselves into half a house, and others, 
formerly occupying half a house, have been reduced to the ne- 
cessity of occupying apartments, or a single floor. This process 
of condensation has left a good deal of property unoccupied. 
There probably have not been so many instances of removal 
to distant suburbs as in better times, as such removal is rarely 
a merely economic measure, so far as family expenses of living 
are concerned. 

Owing to the changes of methods in business already re- 
ferred to in part, and a resulting surplus of store property, 
some stores remain idle, and the rents of nearly all, where 
leases have expired, have suffered reduction. Incited by the 
prevailing low prices for materials and labor, a good deal of 
building has been going on in the face of the depression in 
business, the owners not expecting to find occupants imme- 
diately, but deeming the temporary loss of interest upon the 
investment a less consideration than the advantage obtained in 
the very low cost of construction. 



16 



LETTER Y. 

SPECULATION IN REAL PROPERTY THE CITY A SHARER RUINOUS 

ASSESSMENTS INCREASING TAXES. 

That many have been ruined by the decline in the value of 
unimproved real estate is true, but the conditions were peculiar. 
An era of speculation in property, during which prices per- 
fectly fabulous were current, has resulted in a collapse which 
has wrecked vast nominal fortunes. For several years property 
in the upper part of the city advanced so rapidly in price that 
it is hardly exaggeration to say that a man might, with his 
eyes closed, put his finger upon a map of that part of the city 
above Fiftieth street, purchase the property thus blindly 
indicated, at the owner's valuation, and in a few months it 
could be sold at a profit. It was a lottery in which eve^-y 
ticket drew a prize. Men, many of them of the soundest 
judgment, were carried away by the brilliancy of the bubble. 
Not many expected to hold permanently, and few expected to 
build. It was a passion, a contagious fever. The boldest 
operator was the most successful one. A large part of the 
transactions were upon margins, as they would be called in 
speculations of another character. Some cash was paid and a 
large mortgage given. The crisis of 1873 came ; there was a 
pause. It became difficult to realize the cost of property. 
Large estates were offered at auction. The staggering market 
fell, struck down by the hammer of the auctioneer. The day 
of reckoning came, mortgages were foreclosed, and men who 
had acquired fortunes in other pursuits, but had staked their 
all upon the hope, which they had deemed certainty, of 
advancing prices, found themselves mined. No one can with- 
hold from the sufferers by the revulsion a sentiment of 
sympathy. 

The city was, to some extent, a partner in these transac- 
tions. Stimulated by the success of Central Park, other parks 
were projected, and the property secured at extravagant prices. 
Drives, and avenues, and boulevards of the most permanent 
and costly character, were laid out and constructed. All the 



17 



of several millions of dollars, to defray a portion of the expense 
of some of these stupendous undertakings, and there they stand 
to-day, monuments of coi'porate and individual extravagance, 
almost " as idle as a painted ship upon a painted ocean." The 
city's motto seemed to be, " millions for ornament, but not a 
cent for utility ;" for, during this very period, the pavements in 
taxable property of the city was put under bonds to the extent 
the lower and business portion of the city fell into a condition 
but little better than the streets of a Turkish village ; imped- 
ing traffic, and imposing burdens upon trade, already over- 
weighted in the contest with competing cities. 

It is painful to make these statements ; but they are true, 
and, as intimated in the first of these letters, it is a time for 
plain talk. It is time to strike a balance, to take an account 
of stock, to review the past, and address and adjust ourselves to 
the future with what faith and hope we may. 

While upon unimproved, and, of course, unproductive 
property, taxation was onerous, assessments for improvements 
were crushing ; and have, in districts of considerable extent, 
not only reached, but passed, the verge of confiscation. Time 
affords a solvent for many difficulties, and the embarrassment 
of property thus situated must probably, for the present, be 
remanded to aw^ait the development of methods of relief 
through the subduing agency of time. 

^^ot the least of the evils attending the condition of things 
herein described, is that so large an area has been either placed 
in a condition where it is likely to be kept out of market for 
years, or enhanced so greatly in cost as to unfit it for residences 
of the cheaper grade, so essential for the accommodation of 
families of moderate means, constituting that middle class 
before referred to. This state of things has been the cause of 
the migration, of manv thousands of those who should have 
remained our citizens, to Long Island and New Jersey, and 
emphasizes the demand for methods of transit which must be 
safe and cheap, so as to reach the lower-priced lands in the 
Twenty-third and Twenty-fourth Wards. If it were not for 
the fact that the energies of the city are fettered by the bonds 
2 



18 

of a crushing debt, iminicipal aid for an effective method (jf 
utilizing the vacant territory in the annexed district would be 
a fair subject for consideration. But it may be questioned 
whether the city is not in the condition of a man who, by his 
extravagance, has incurred debts which form a lien upon his 
estate of such gravity as, for a time at least, to hinder his 
improving his property in a direction almost indispensable, 
and compel him to practice a* unused and inconvenient 
economy, to the absolute detriment of his estate. 

It was not until after 1837 that the taxes of this city 

regularly exceeded 50 cents on the $100. In 1846 they began 

to exceed $1 on the $100, and since 1863 they have regularly 

exceeded $2 on the $100. Since 1863 the state tax alone has 

greatly exceeded, every year, upon each $100 of valuation, the 

rate of the city tax prior to 1837. The tax-payer, in looking 

over the musty records of the past, is apt to forget how meagre 

were the returns he received for his taxes forty and fifty years 

ago. It was the old story of " poor pay, poor preach." Then 

he bought his spring water from a cart ; he had no day police, 

and his night-watch was without discipline ; his streets were in 

darkness when the moon was in the almanac ; his fires were 

extinguished by water from cisterns or the rivers, through 

large syringes upon small w^heels ; his parks were the common 

lands : his schools taught the three R's ; he swept the streets 

on certain days by his personal labor, and the ashes from his 

wood-fires were sold to collectors. In short, he did without 

many things he now has, and did many things for himself 

which others now do, or at least are paid to do, for him. It is 

unnecessary to detail them, but this changed condition costs — 

far more than it ought to, I admit. The luxuries unknown in 

former days — and we always think them better days — have 

now become necessaries, and the (piestiou can never be how to 

dispense with them, but how^ to enjoy them without a cost 

quite disproportioned to the cost of snnilar service, not only to 

private corporations and persons, but to other municipalities. 

This is the problem demanding present solution ; so that this 

great city, relieved from hindrances, so far as may be, in this 



19 



direction, shall be the better fitted for the contest with aspir 
ing rivals. 



LETTER VI. 

"WHO PAY THE CITY TAXES THE VALUE OF KEAL ESTATE FIXED 

BY THE VALUE OF THE PERSONAL PROPERTY UPON IT. 

And now, in view of some suggestions to follow, it be- 
comes necessary to determine who pay the $30,000,000 of an- 
nual taxes in this city. It is the owners of personal property. 
The generally received opinion is that it is the owners of real 
estate who pay the bulk of the city's annual tax. But let us 
look for facts a little below the surface. A owns five dwell- 
ings, and deems himself a considerable tax-payer. Analyze 
this claim. He rents one to B, a physician ; the second to C, 
who is an editor ; the third to D, who is a bank ofiicer ; the 
fourth to E, who is a lawyer ; the fifth ^he occupies himself. 
Now, to the rent charged to B, C, D, and E is added a sum 
sufiicient, at least, to pay the taxes upon the dwellings occupied 
by them respectively, and this rent, including the taxes, is the 
product of personal property, that is, the brains of the several 
tenants ; and yet not one of these tenants may apj)ear upon 
the tax rolls as specifically assessed for personal pi'operty, and 
still by the use of their specifically untaxed and untaxable per- 
sonal property — brains — they pay all of A's taxes upon the 
real estate he owns, and give him his living l;)esides. 

Or, again, A owns five stores. He rents one to B, who has 
it filled with imported goods ; the second to C, who occupies 
it wath goods on commission ; the third to D, who uses it for 
general merchandise and resides in Brooklyn ; the fourth to E, 
who fills it with goods manufactured in another State, sent to 
him as an agent to sell ; the fifth to F, whose goods are pur- 
chased with money borrowed upon United States bonds. Now, 
none of these stocks of merchandise are taxed, or taxable, 
specifically, under the law, and yet they all do pay, in their 
rents, the taxes assessed to A, and furnish him the means of 
living besides. 



20 

Yet again, A owns five tenement-houses, which are- 
rented to laborers, mechanics, porters, seamstresses, people not 
taxed or taxable, specifically, under the law, and yet who pay 
by means of their personal property — brains, eyes, hands,, 
muscles — the taxes upon the property they occupy. 

Or, if you please, A owns five vacant lots, but the taxes he 
must pay from personal property — it may be the income from 
United States bonds, or investments in another State, property 
not taxed or taxable, specifically, under the law, but which is 
yet made by an inexorable higher law to pay taxes upon the 
unimproved and unproductive real estate, and so contribute to 
the support of the State and city governments. 

Or, A may own his dwelling only, as real estate, and then 
again he can by no possibility pay the taxes upon it unless he 
has either investments in personal property, or follows some 
pursuit wdiich is made productive by the aid and use of per- 
sonal property, which will furnish the means to pay the taxes 
upon that dwelling. 

There is one warehouse in this city which pays an annual 
tax of $30,000 to $40,000. It is used for the storage of goods, 
nearly — perhaps quite — all of which are not taxed or taxable 
under the law ; yet these very goods pay, in the charges upon 
them, the whole of this enormous sum of taxation. 

Now, it may be that these views are at such variance with 
commonly received opinions that they will not at once find 
credence. Nevertheless they are tme, and their general accept- 
ance would be productive of good. Nothing would, perhaps, 
go so far to promote true reform — I do not mean a mere sav- 
ing of candle ends, but a jealous watchfulness over all sources 
of extravagance and corruption — as to invest the entire people 
with a sense of their dignity and power and responsibility as 
tax-payers. When the whole population can be uiade to feel 
how closely and utterly their interests are bound up in the 
welfare of the city they inhabit, the outlook for the future of 
New York will indeed be hoj)eful and bright. 

To retm*n from this brief digression. It has been esti- 
mated that the value of the personal property in this city in 



21 



various forms is some $2,000,000,000, of which, about nine- 
tenths, or more than $1,800,000,000 is not taxable under pres- 
ent laws. (See Tax Commissioner's Report for 18Y5.) Yet it 
is evident, from the statements made in this letter, that in 
spite of constitutional and legislative exemptions, all the per- 
sonal property in this city is taxed, although but little of it 
specifically ; and, further, that the personal property really 
pays all the taxes of the city. Real estate serves as the visible 
and tangible standard of measure — the foot-rule, if you please 
— by which the tax is adjusted and proportioned. 

l^ot only does personal property pay the taxes levied as 
against real estate, but the value of the real estate is fixed and 
controlled by the value of the personal property upon it. Real 
estate in New York is assessed at nearly $900,000,000, while 
the real estate in Hamilton County is assessed only about 
$660,000. Hamilton County is about 40 times as large as 
New York, and the soil as good, but the real estate of the 
smaller coimty is made v^aluable by the amount of personal 
property upon it, while the real estate of the larger county is 
almost valueless, because of the absence of personal property. 
Within the city itself the real estate of that ward or district is 
most valuable which has the largest value of personal property 
upon it. Thus, the diminutive First Ward is assessed at 
$51,000,000, the vastly larger Nineteenth at $119,000,000, and 
the still larger Twenty-fourth at only $9,000,000. Any one 
at all familiar with the city knows that these variations are 
due to the distribution of personal property, and its owners, in 
the respective wards. If the Twenty-fourth Ward could secm-e 
the same proportion of personal property, and its owners, as 
the First or the Nineteenth, the value of its real estate would 
increase in like proportion. It is obvious, then, that the end 
which every o\\Tier of real estate in that ward should seek is 
to bring personal property within its limits. Once there, 
whether taxed specifically or not, it can no more escape taxa- 
tion than a ponderable object can escape the operation of the 
law of gravitation. 

It may be of interest to note the fact here that in 1876 the 



22 

« 

city, with 22 per cent, of the population, taxed 57 per cent, of 
the personal property specifically assessed in the entire State. 



LETTER VIL 

RELATION OF REAL AND PERSONAL PROPERTY RENTS AJiD 

TAXES HOW VISITORS PAY TAXES — TWO POLICIES IN BUSI- 
NESS. 

In view of the statements made in the last letter, it must 
be conceded that the relations between real and personal prop- 
erty are of the most intimate, and should be of the most 
amicable character ; and that real estate is dependent for its 
prosperity upon the presence of personal property, and not its 
mere presence, but that its conditions shall be such as to make 
it active, productive, and profitable to its owners. The present 
depression in tlie value of real estate generally, is not from 
any inherent cause, that is, any cause originating in and pecu- 
liar to itself. There is no greater area of real estate in New 
York than when its price was much higher, but the cause of 
the decline is attributable only to the condition and circum- 
stances of personal property. When the merchant finds his 
stock of goods declining in value on his hands, he must reduce 
expenses, pay less store and liouse rent, and curtail the pay of 
his assistants, compelling them in turn to seek lower rents. 
When a bank reduces its capital, the pay of its officers and 
clerks also suffers a reduction, and they too seek cheaper rents. 
When the mechanic and laborer find that their personal prop- 
erty — skill and physical strength — ^is in less demand and their 
wages are reduced, or idleness enforced upon them, they also 
seek cheaper rents, or cease to pay rent. All these classes are 
consumers, and with diminished means their purchases of per- 
sonal property are diminished. They buy less of the grocer, 
the butcher, the tailor, the milliner, and the retailer of diy- 
goods ; so that the grocer, the butcher, the tailor, the milliner, 
and the retailer of dry-goods each finds his business, profits^ 
and power to pay rent diminished ; and as the rent received ir 



23 



tlie general basis of real estate values, real estate, under such 
influences, must of course decline. 

While taxes represented but one-fifth or one-sixth of the 
rent received by the real estate owner, they could be endured ; 
but when out of a greatly reduced rent, unreduced taxes take 
one-third, or perhaps one-half, then the burden is felt to be 
unendurable, and the real estate owner finds that he has been 
struck by the calamity which first struck the owners of per- 
sonal property, and through them reached him. Now, all this 
proves not antagonism, but harmony and unity of interest. 
Had no disaster befallen the owners of personal property, it is 
possible that the wildest dreams of the operators in unimproved 
property might have been reahzed. 

Real estate is the last interest to feel the effects of a panic 
or revulsion, and it is also the last to recover. The reason is 
obvious. The blow falls first upon personal property, and 
through it is distributed to real estate, which does not feel the 
full force until the whole structure of society has adjusted 
itself to the new conditions, imposed by the disasters suffered 
by the owners of personal property. For a time such disasters 
are not accepted as final ; there is hope of recuperation ; but 
at last the fact is accepted, and then the readjustment of ex- 
penses is resorted to, through which real estate is finally reached. 
So, too, recovery affects real estate last, as that result must be 
preceded by the recovery of a degree of prosperity by the 
owners of personal property in all its multiform shapes, or by 
an absolute accretion of population. The latter means of re- 
cuperation is the more rapid, if it can be secured, and that is a 
question which shall receive consideration. 

It is not the personal property of residents only which pays 
the taxes in this city, but that of the stranger within our gates 
who contributes. No visitor can buy a pint of peanuts or a 
paper of tobacco, a cashmere shawl or a diamond bracelet, can 
ride in a cab or visit a theatre, can stay a night in a lodging 
house or board a week at a hotel, without contributing to pay 
the taxes charged as upon real estate. Not a case of goods, 
or a bale of cotton, or stick of timber, or a pig of iron can 



24 



pass through the city without also contributing to bear the 
burden of taxation. 

The great object in life, then, of every real estate owner, 
should be to bring more people here with their personal property, 
to occupy dwellings and stores ; more visitors to buy peanuts and 
diamonds ; more bales of cotton and pigs of iron to be handled 
and stored, and so to distribute the indirect taxes upon them 
as to make the burden of all taxation comparatively easy to 
bear. 

In business, two policies are recognized — one is to do a small 
trade with large profits, and the other is to do a large trade 
with small profits. The former policy is one of the past, 
which has been practically abandoned as narrow, illiberal, and 
ineffective. It is a policy which should not be adopted, 
and cannot be carried out in the face of competition or oppo- 
sition in trade. In such a case the competitor dictates the 
policy. This is, in some sense, the problem which now presents 
itself for solution to the people of this city, as to which policy 
they shall adopt. In my judgment they have no choice. In the 
keen competition for trade, and supremacy in trade, the rival 
dictates the policy to a certain extent, and nothing but dense 
stolidity and obstinacy can justify adherence to a narrow and 
obstructive theory. It is the interest of the real estate owner, 
which is not only in jeopardy, but in actual suffering. It is 
for his benefit these letters are written, for his welfare alone is 
bound up indissolubly with the future of New York, Per- 
sonal property is migratory and fugitive. A truck or a carpet 
bag w^ill suffice to remove it ; and a draft or bill of exchange 
will give it wings. 

The questions of the hour, then, are substantially these : 
how to keep, how to attract, and how to utilize this life-giving, 
tax-paying, debt-bearing element, known as personal property. 



25 



LETTER VIII. 

NEED OF POPULATION AND PERSONAL PROPERTY HOW THEY ARE 

REPELLED INSTANCES NOT THE POLICY OF BUSINESS MEN. 

Said Mr. Burke, in his great speech on the " True theory 
of the rights of man : " " In states there are often some obscure 
and almost latent causes, things which appear at first of little 
moment, on which a very great part of its prosperity or 
adversity may most essentially depend." The insidious, but 
often fatal, effects of noxious gases from defective drains are 
pretty generally understood ; yet it is often of little use to 
admonish the man in vigorous health of danger from a cause 
so remote and ol)scure. But let the poison enter the blood of 
his family or himself, and he will give heed to statements of 
facts, and give attention, at least, to suggestions designed to 
remove the cause. To-day ]^ew York is sick, and may possibly 
hearken to suggestions which in other conditions would be 
scouted. 

What New York needs for recovery from the present 
paralysis in real estate, for the development of her resources, 
and to assure her predominance in the future, is population 
and personal property — or to put it more concisely, men and 
money. Yery well, you say, let them come ! But just there is 
the difficulty — you won't let them come ; indeed, you will not 
even let them stay when they have come. Let me illustrate 
by a few, a very few, facts bearing upon the proposition " to 
let them come." 

An inquiry was made a few months ago by a member of the 
Bar as to whether a client of his, not residing here, by remov- 
ing to this city and investing $250,000 in business would sub- 
ject that capital to taxation. He said that his client preferred 
New York as the future scene of his business activity, but that 
this city did not present such supreme advantages over another 
city, as to justify him in paying the tax. Witli great reluctance 
his counsel was told that the law would impose the tax, and he 
went away sorrowful. 



26 

A gentleman from abroad recently brought letters to a mer- 
chant here, asking his co-operation in assisting the foreigner 
in obtaining property for establishing'a manufacturing business 
here with foreign capital. Tlie merchant, in view of the 
quantity of manufacturing property standing idle, advised the 
foreigner to advertise for such property. He did so, and was 
alarmed at the great number of answers received, and pro- 
ceeded to consult the merchant, who was, in turn, amazed. 
The foreigner very wisely said, "If I had received a dozen 
answers, I should probably have proceeded to make my selec- 
tion, but there must be some special cause that has vacated so 
much manufacturing property." The merchant advised him 
to inquire of some of the owners. He did so, and then, for 
the first, learned that the taxation of capital was literally the 
moving cause, and that he too would be subjected to it if he 
invested here. And he also sought another city. 

A gentleman who had made a fortune of several millions, 
in a distant State, charmed with the brightness and gayety of the 
city, decided to spend several months in each year here, and 
entered into negotiations for a house at an annual rent of 
$10,000. Before they were concluded he learned that he might 
be subject to a tax upon his personal property, and the charm 
was broken and the man and the money lost to the city. 

Here are three typical instances. There have been thousands 
of such within the past ten years, some more, many less, im- 
portant. " Let them come, " indeed. Why don't you? You 
keep at large expense a dog to drive them — men and money — 
off. He is, to be sure, old and nearly toothless, but they don't 
know that, and he has here and there a tooth which might 
puncture them. Many have been bitten, but let us hope that 
it may soon be said : " The man recovered from the bite ; the 
dog it was that died." Is any other business conducted upon a 
principle which the above examples illustrate ? Does any dealer, 
wholesale or retail, tax a visitor for entering his premises i 
While they are on his premises he protects them, shelters them 
by his roof, warms them by his fire, gives them water if thirsty, 
would be liable for damage if they fell through an unguarded 



27 

hatch or staii'way. But whether they buy or not, he does 
not present a tax bill for the "protection" he has given, JSTo, 
he puts all that in his bill for goods sold, just as the tenant finds 
it in his rent. The difference between the dealer and the city 
is this, many may visit the store or shop and few buy, but none 
can live in the city without in some way paying for such 
" protection " as he may receive. The customer, like the 
untaxed personal property, really pays for all the protection 
received, but in such a way as is not felt, perhaps not even 
known. 

It cannot l)e necessary to follow out in detail all that the 
city lost when, as in the cases cited, men and money were turned 
from the very doors they desired to enter. Every interest 
would have been benefited and stimulated by their establishment 
here ; but real estate more than all. These rejected, repelled 
elements are those for the want of which real estate is languish- 
ing, rents declining, mortgages foreclosing, ruin impending. 
These rejected customers and consumers were willing to bear 
their share of taxation, assessed as upon real estate, to help to 
pay the debt, and help to pay for the government or misgovern- 
ment of the city; but they were not willing to incur the risk of 
being specifically taxed, in addition, upon their personal prop- 
erty, not acquired here, perhaps not even situated here, and 
which would contribute so largely to the present welfare and 
future prosperity of the city. 

This law for taxing personal property has been illustrated 
by the figure of an old and almost toothless cur. It is well 
known that it is almost wholly inoperative, owing to inherent 
defects, and want of adaptation to changed conditions of affairs. 
Yet this cur barks and scares, has a shadow which blights, and 
here and there, a fang, which rends unmercifully, when it 
does penetrate. What shall we do with him^ Send him to a 
dentist for other and sharper fangs, or provide him with a short 
rope and heavy stone ? 



28 



LETTER IX. 

NATURE OF CAPITAL HOW THE MIDDLE CLASS IS EXPELLED 

INSTANCES AMENDING CONSTITUTIONS. 

The repelling force of tlie law as regards population and 
capital having been demonstrated, it is proper to consider 
briefly tlie expelling power of the same law. Capital is timid 
and fugitive. It may be compared to a gelatinous substance, 
more of which can be held in the hand when extended open, 
than when the hand is closed or partly closed. As soon as the 
hand is bent toward closing, the substance begins to escape, 
and if an attempt is made to grasp the whole by firmly closing 
the hand, the whole escapes, and the hand is left empty. Last 
year the law was for the iirst time strictly enforced in assessing 
the shareholders of banks, and the immediate result was a gain 
of some $10,000,000 of assessable capital ; but the result this 
year will probably be a loss of $20,000,000 as compared with 
1876, or a net loss of $10,000,000 as compared with 1875. 
This result is brought about by the distribution of surplus 
funds and the reduction of capital, and is referable chiefly to 
the increase of taxation upon that class of property, aided, it 
is- true, by other contributing causes. The direct and con- 
tingent effects upon real estate, and upon the general business 
character and interests of tlie city, are most damaging. 

A positive result of the specific taxation of personal prop- 
erty has been to drive an immense number of the middle class 
iifrom the city. People who, by their industry and frugality, 
or by inheritance, have acquired from $20,000 to $50,000, 
deemed themselves able to live in such degree of comfort, as 
their more or less frugal habits demanded, in this city, where 
their " best friends and kindred dwell." But when, in addi- 
tion to the indirect taxation, they are subjected to a specific tax 
reaching all their personal property, they wrench themselves 
from social and family ties, and seek a home beyond the city 
limits. If they occupy a hired house, it is thrown upon the 
hands of the owner; if they own a dwelling, it is put in the 
market to let, and comes in competition with other unrented 



29 

real estate, to its detriment and loss. These people are con- 
sumers, and, as explained in the seventh letter, all trades and 
business suffer, but the ultimate loss reaches the owner of real 
estate. Are these people to blame ? Let us see. A man has 
lS30,000 invested on bond and mortgage, the accumulation of a 
life of labor and saving. The income of $2,100 gives him a 
living with which he is content. Out of it he pays the taxes 
on his own or his landlord's house, and helps all of whom he 
buys, to pay their rents and taxes. But when the city steps in 
and takes $840 out of his $2,100 of income (at the rate of 
last year), he is at once reduced below his standard of com- 
fortable living, and neither social nor family ties, love of the 
scenes of his childhood and success, nor pride in the city of his 
birth or adoption will detain him. Sadly he gathers his house- 
hold goods and seeks a place whose sole recommendation is 
that he will not be taxed. His action is simply dictated by the 
instinct of self-preservation, ovei-powering all social senti- 
ments. 

Can they do better elsewhere ? They can. A party was 
assessed here for $150,000, and his last tax bill was over 
$4,000. He has gone where he is assessed $10,000, and his 
annual tax bill is $150. Another was assessed here $25,000, 
and he has gone where he is assessed $1,000. There would be 
a far more extensive exodus from this city, but for the fact 
that so many investments are exempt, under the constitution 
and the law, from assessment. A gentleman said recently : 
" I would not stay in this city thirty days if my large capital 
in business could be taxed ; my wife would object to leaving 
the city, but I should overrule that, and as my capital is in im- 
ported goods, protected from local taxation by the Constitution 
of the United States, why, I remain." 

Let me relate the observation of a single day not a month 
old. A gentleman advanced in years was assessed, and paid, 
on $29,500 last year. This year he remains on his little place 
in the country, and the tax and the man are lost to the city, 
where his custom had been and his desire was to spend eight 
or nine months each year. A younger man, with a modest 



30 



competence acquired in trade, whose retirement from business 
was enforced by delicate health, is driven away by an assess- 
ment of $15,000. Another gentleman, assessed for $85,000, 
will pay it this year for the last time, as he will go abroad to 
reside — a measure he had held in doubtful contemplation, but 
which was decided by the tax. There have been thousands of 
such cases within the past ten years. 

Here is a process of depletion going on, a leak unknown 
and unnoticed — " an obscure and almost latent influence," as 
defined in the extract from Mr. Burke's speech — which, in 
time, would arrest the development of any city, and hand over 
her sceptre of supremacy to an ambitious and far-seeing rival, 
I would be glad if these letters could be read by the real estate 
owners of New York only, for I hate to encourage a rival with 
the knowledge that this city is afflicted with a running sore, 
draining its energies, and threatening premature decrepitude. 
But a faitlif ul diagnosis is essential to the cure of the sick man. 

An inquiry was made a few days ago, at a casual meeting 
of several gentlemen largely interested in the prosperity of the 
city, as to what were the hindrances to the enactment and 
enforcement of an equitable law which would reach every de- 
scription of personal property, and so distribute the burden as 
to make it nominally light on all. The answer was that to do 
this only three things were necessary : 

First — To amend the Constitution of the United States. 

Second — To amend the Constitutions of the otlier States. 

Third — To amend the constitution of human nature. 

The Constitution of the United States would have to be 
amended, for under it full one-third of the personal property 
in this city is placed beyond the reach of State tax laws. 

The Constitution of other States would have to be amended, 
so that their laws shall conform to yours, or you might as well 
bum down certain business portions of the city as to attempt 
to enforce such a law in the face of competing rivals with 
more liberal tax laws. 

The constitution of hiunan nature would have to be 
amended, or personal property would fly to other countries. 



31 



beyond the reach of your amendments, impelled by the instinct 
of self-preservation. 

It is evident that something ought to be done, and done 
quickly, but that must be the subject of another letter. 



LETTEK X. 

THE MASSACHUSEITS TAX LAW PRETENSIONS AND DEFECTS OF 

THE NEW YORK LAW AIDLNG OTHER STATES AT HER OWN 

COST. 

The City of New York has, in reference to the subject 
immediately under consideration — the taxation of personal 
property — two diverse courses open before her, either of them 
better than to maintain the present condition of things, which 
is simply suicidal and ruinous. Her future greatness depends 
largely upon the choice. The first course would be to tax per- 
sonal property in every conceivable form pennitted by the 
Constitution. To accomplish this result, the law of Massachu- 
setts would furnish, probably, the best model. Under it 
every " inhabitant " in that State is required to fill up a 
schedule, to be sworn to, setting forth the value of his posses- 
sions on the 1st day of May in each year, in mortages, money 
at interest, and other debts due him. Only from these items 
is he allowed to deduct the debts he owes. All other items 
must be taxed without deduction for debts. They include 
cash on hand ; goods, wares, and merchandise within or with- 
out the State ; machinery, tools, implements of trade ; (exceed- 
ing $300,) income (above $2,000) from profession, trade, or 
employment ; income from annuities ; vessels, or parts of ves- 
sels at home or abroad ; horses and vehicles ; furniture ; (ex- 
ceeding $1,000,) shares in corporations, including those pledged 
as collateral ; public stocks, railroad bonds ; other personal 
property not enumerated ; personal property belonging to wife 
and minor children, or held as executor, administrator, or 
trustee. There is, besides, a jjoll-tax to reach the person. 



32 

If New York thinks proper to adopt the commercial policy 
referred to in the seventh letter, of doing a small business at a 
hirge profit, then enact a law similar to the above, and at the 
■same moment accept the fact that those rivals whose policy is 
to do a large business with small profits, will leave this city far 
behind in the competition for business. The first effect of the 
adoption of such a law would probably be to raise the assess- 
ments on personal property in this city from some $200,000,000, 
to some $900,000,000, or even more, and reduce the nominal 
rate of taxation to $1.50 or $1.40 upon the $100. But a reac- 
tion would follow almost immediately, and the amount of the 
assessment would decline. Real estate would be relieved of a 
part of the tax, but it would also be relieved of a part of its 
occupants, and find it more diflicult to pay tlie smaller sum 
than the larger. Better pass such a law, how^ever, than do 
nothing. A Legislature — even the General Court of Massachu- 
setts — cannot by enactment, make w^ater run up hill ; a man 
cannot violate the laws of his physical being with impunity, 
and a State cannot violate the unwritten laws of trade without 
paying the penalty. In mitigation of that penalty, Massachu- 
setts has repealed her usury law, so that by agreement any 
rate of interest may be legally charged and paid in that State, 
and even loans on mortgage may be fixed at 8 or more per 
cent., and so the mortgagee is able to indemnify himself for 
the tax by charging the same and a little more to the mort- 
wio-or. This is not tlie entertainment to which the owners of 
real estate in this city desire to be invited. 

From a singularly able and exhaustive treatise upon " Tax- 
ation in Massachusetts," by William Minot, Jr., Esq., just issu- 
ed, the following extract shows the ridiculous provisions of 
the laws in that State, when the absolute effects are formu- 
lated into declarations of penalties and bounties : 

" That if any citizen invests money in sliips sailing from one of our sea- 
ports rather than in a ship whieh sails from Philadelphia, for instance, 
he shall forfeit for sucli offense annually the sum of $15 for every $1,000 
so invested. 

" That if any person, not an inhabitant of this State, invests in any ship 



33 



sailing from this port, rather than a ship sailing from Philadel]jhia, he 
shall forfeit, annually, for every |1,000 so invested, $15. 

"Tiiat if any foreigner endeavors to promote the prosperity of this 
Commonwealth by loaning money to build houses, railroads, mills, or fac- 
tories, or in aiding by investment any business enterprise, he shall forfeit 
for every $1,000 so invested, the sum of $15 annually. 

" That if any inhabitant or foreigner attemps to assist the prosperity of 
the State, by investing money inland or goods which he borrows money 
to pay for, he shall forfeit for every such offense, in addition to the full 
tax on such lands or goods bought, the sum of $15 annually, for every 
Si, 000 so borrowed. 

' ' If any person attempts to open and sell any package of imported 
goods, he shall forfeit for sucli offense the sum of $15 for every $1,000 
worth of goods so opened and sold. 

•' If any person removes personal property of any kind from this State, 
he shall receive a reward of $15 annually, for every $1,000 so removed. 

" If any person brings personal property into this State, he shall forfeit 
$15 annually for every $1,000 so brought in. 

"If any person, being worth $1,000,000 in personal jjroperty, will re- 
move to the City of Newport, build a house there and assist its pros, 
perity, he shall receive an annuity from the State of Massachusetts of 
$15,000. 

"If any person living in Newport, having $1,000,000, comes to live 
witliin this State, he shall forfeit for such offense the sum of $15,000 
annually." 

Tlie law of the State of New York is a specimen of preten- 
tious mendacity. See how it menaces all kinds of personal prop- 
erty, when it defines as subject to taxation " all household 
furniture, moneys, goods, chattels, debts due from solvent 
debtors, whether on account of contract, note, bond, or mort- 
gage, public stocks, and stocks in moneyed corporations." 
Munchausen never crowded so many lies in so few lines. 
Still the menace is there, with all its repelling and expelling 
force. Under its pretension more than $5,000,000 have been 
wrongfully paid in the last 10 years to the City, because tax- 
payers were ignorant of their rights under the law. 

The tax laws of the State of New York were enacted 50 
years ago, and were but imperfectly adapted to the require- 
ments even of that day. The machine then devised has had 
cog-wheels taken out by the courts, crank-pins removed by the 

3 



34 



Legislature, new forms and methods in business have rendered 
portions inoperative, and it has been submerged by the issue 
of more than $2,000,000,000 of Government bonds, notes, 
etc., untaxable, and yet it is expected to work. One might as 
well expect usefid and effective work from the Cleremont — 
Fulton's first steam-boat — in conipeti'ion with the steamers of 
the present time. For a statement of the utter inefficiency 
and uselessness of the law as a means of revenue, I refer to 
an address before a legislative committee in 1874.* It may 
be said that the Massachusetts law works well in that Com- 
monwealth, and it is true that it does work moderately well, 
reaching, perhaps, from one-half to two-thirds of the property 
assessable. The people of that State have for generations been 
trained to submit to such methods, but the probability that the 
people of the State of JSTew York will, at this date, impose 
upon themselves a law so inquisitorial and oppressive, is as 
remote as the enactment by them of the old blue-laws of Con- 
necticut. It is worthy of note, too, that the fact that this 
State pretends to have a personal tax law is a buttress which 
enables Massachusetts to maintain such a law upon her statute- 
book ; because it is admitted by the highest authority that if 
New York should adopt a more liberal and enlightened policy, 
Massachusetts would have to follow by the relaxation of her 
laws. 

New York, then, occupies this extraordinary position : She 
is, to her own great detriment, adding to the resources of two 
adjoining and competing States. On the one hand, Massa- 
chusetts is sustained in her narrow policy, which, however, is 
effective in increasing her revenues, and is enabled to adhere 
to traditional methods, because New York pretends to do the 
same, yet does not do it in any effective way. On the other 
hand, Pennsylvania is sustained in her more liberal policy of 
practically excluding personal property from taxation, and 
reaps the most solid advantages by additions to her population, 
trade, and manufactures of those driven or diverted from this 
city by our laws professing to tax personal property, but which 
* See extract in Appendix. 



35 



are in effect a sham, a bugbear to frigliten, and not an agency 
to secure revenue. Is not New York, so situated and so acting 
in promotion of tlie welfare of other commonwealths at 
the sacrifice of her own, the most magnanimous of States? 
or is she the most stolid ? The situation justifies the repetition 
of a figure used before, that " New York is, like Issachar, ' a 
strong ass crouching down between two burdens.' " 

It remains to be determined whether New York will con- 
tinue to " look back," or whether, casting off the schackles 
which impede her, she will press forward, and cany the prize 
she won in other days quite beyond the reach of rivals. It is 
in her power to do it, as I hope to show. 



LETTER XL 

PLAN OF A BENEFICIAL TAX LAW SPECIFIC ADVANTAGE TO REAL 

ESTATE FREE TRADE IN MONEY. 

While conceding that it would be better to adopt the Mas- 
sachusetts mode for taxation than to do nothing, the tax laws 
of Pennsylvania, enacted some ten years ago, present a model 
far more desirable as a means of promoting the future growth 
and welfare of New York. The theory of the law in ques- 
tion is the practical exemption of personal property fi'om di- 
rect municipal taxation. This mode is, to be sure, disfigured 
by some petty details at variance with its general character, 
such as the taxation of furniture, vehicles, and watches, more 
effective as sources of annoyance than of revenue. The out- 
line of this s^^stem was pretty fully presented to your readers 
a year ago, and it is not proposed to repeat it here. The main 
feature is the taxation of corporations directly by the State for 
the revenue of the State, and the relief of the land from taxa- 
tion for State purposes. 

The laws for taxing coi-porations in the State of New York 
are shamefully confused and inefiicient, and an enormous 
amount which might be secured as revenue is suffered yearly 
to run to waste. Except a special act for reaching indirectly 



86 



the capital and surplus of banks, there has been no legislation 
to adapt the laws taxing corporations to the changed condition 
of the financial affairs of the country growing out of tlie 
creation, under the Federal laws, of thousands of millions of 
non-taxable money and securities. The assessment of corpora- 
tions is left to many hundred Assessors in the State, not ten 
of whom can possibly be iamiliar with the laws, and the vari- 
ous interpretations placed upon them by the courts. Doubts 
also are frequently arising as to the place where coi-porations 
are liable to be taxed. 

Now, all this loss and confusion would be avoided if the 
corporations were assessed by the State Assessors, under a code 
to be wisely adjusted so as to distribute taxation equitably, 
with reference to the means, condition, and purposes of the 
corporation ; keeping the tax below the repelling and expelling 
point, and recognizing the claims of manufacturing and pub- 
lishing corporations to consideration. The real estate interest 
would reap a substantial and material advantage in relief from 
the State tax, and corporations, when each class should be 
equitably and uniformly taxed, would cease to be the objects 
of jealousy and distrust. The real estate of corporations 
should be taxed where it is situated, as at present, and, if de- 
sired, every county except New York might continue to tax 
personal property for local purposes, omitting, of course, the 
capital of coi-porations taxed by the State.* 

But, says the owner of real estate, you propose to add to 
the burden upon my property. Let us see about that. Loans 
upon bond and mortgage are to a very great extent, as the 
effect of our present tax-laws, limited to institutions whose in- 
vestments in such securities are specifically exempt from taxa- 
tion by law, and to residents of other States and countries be- 
yond the reach of our tax-laws. The shadow of the tax-law, 
however, rests upon this class of investments, and the effect 
has been to keep the rate of interest upon this — the highest 
possible grade of securities — at a rate full 1 per cent, above 
what it would otherwise be. The institutions whose invest- 



* For further details of this plan see Appendix. 



37 



ments in mortgages are exempt by law are enabled to obtain 
7 per cent., because there is practically no competition, as a 
private lender generally dare not make sucli an investment for 
fear of the tax. Remove that fear and capital would gladly 
seek an investment so safe at a lower rate of interest. It is 
estimated that the real estate of the city is incumbered by 
more than $4:00,000,000 of mortgages, and a saving of 1 per 
cent, upon that sum is $4,000,000 annually. 

The debt upon which the city pays interest is in gross 
something like $120,000,000, all of which is liable to taxation, 
and for that reason is held chiefly by such institutions as hold 
bonds and mortgages, and by non-residents. It is not at all 
diffused among the people. The interest upon this sum is full 
1 per cent, higher by reason of this mere liability to taxation 
than it would otherwise be. Remove this liability, and ulti- 
mately the debt could be placed at a rate of interest at least 1 
per cent, less than is now paid. In view of the fact that the 
whole of this benefit could not be at once realized, let the 
saving from this source be called only $1,000,000. per annum. 
The sum to be paid for the State tax this year is a trifle over 
$4,000,000. This amount would be a direct and immediate 
saving. 

]^ow look at the other side. The sum to be realized from 
personal taxes this year will probably not exceed $5,000,000, 
and if the law is suffered to remain unchanged, the probability 
is that hereafter it will continue to dwindle. How would the 
account as affecting real estate stand then ? 

Real estate would save on State tax $4,000,000 

Real estate would save on interest of city debt . . . 1,000,000 
Real estate would save 1 per cent, on $400,000,000 

mortgages 4,000,000 

Total gain $9,000,000 

Real estate would lose tax on personal property . . 5,000,000 

Net gain to real estate $4,000,000 

I have not a shadow of doubt, if such a system were 
adopted, that within seven years the rate of taxation upon real 



38 

estate would fall below 2 per cent., provided that the general 
expenses and debt of the city should not be materially in- 
creased during that period. 

The diminution in the rate of interest upon mortgage loans. 
is not a mere chimera evolved from the mind of an enthusiast^ 
who invests his statements with gorgeous but unreal possibili- 
ties. The Real Estate Record of Feb. 24 says, in relation to 
the exemption of mortgages from taxation, and the resulting 
reduction in the rate of interest : " The freedom which will be 
thus afforded in the negotiation of mortgage loans will redound 
to the benelit and prosperity of real estate interests in ways 
innumerable, and with effects whose bare contemplation is 
dazzling to the imagination." 

It cannot be necessary to add to what has already been said 
to demonstrate how essential it is to the future welfare of New 
York that she should be able to announce to the world that 
her settled policy and declared motto is, ^"-Free Trade in Money T 
That is to say, that money, and personal property representing 
money, shall not be specifically taxed in this city. 

If population is to be speedily and largely increased ; if 
capital is to be attracted, held, utilized ; if empty houses and 
stores are to be tenanted ; if vacant property is to be built 
upon; if costly improvements are to be made available; if 
projected improvements are to be given effect ; if trade is to be 
augmented ; if the entire real estate interest is to be revived ; 
if manufactures are to be established ; if the poor are to find 
employment ; if the middle class is to be recalled and retained ; 
if brightness is to replace gloom, and sunshine cloud ; if the 
future of New York as the chief poit, the financial centre, and 
the commercial metropolis of the country is to be assured, it 
must be under a banner whose device shall be, " Free Trade in 
Money." 



39 



LETTEK XII. 

SOME CONCLUSIONS THE GKAIN TRADE ADVANTAGES OF NEW 

YOKK THE FUTURE. 

Thus far it lias seemed my duty to present statements, some 
of them of a depressing tendency, not from a desire to depress, 
but because such was the inherent character of the truths that 
needed to be presented, in order to obtain a full understanding 
of the case. It accords far better with my disposition and 
temperament to dwell in sunshine than in gloom ; so let us 
gather into conclusions the experience and lessons of the 
past. 

If New York could for ten years develop her resources and 
energies, unfettered, under the advanced policy of Free Trade 
in Money, as described in the last letter, and a proposition 
should then be made to restore the present restrictions, the 
real estate interest would be the first to protest against such a 
suicidal pohcy. If the government were to attempt to restrict 
free trade in money in Paris by the incumbrances which now 
fetter the energies and hinder the development of New York, 
revolution would be the result. New York ought to be — can 
be — the Paris of America. New York ought to be — can be — 
more than that, for she can be and remain what she now is, as a 
money centre and a commercial power on this continent, what 
London is to Europe. With no restrictions to hinder her 
development, she may, ultimately, grasp the sceptre of financial 
supremacy, and become the source and centre of financial 
power in the world, which ages ago had its seat on the 
Adriatic, and afterward, on the Amstel, and now on the 
Thames, and may, in the future, find its home on the Hudson. 
But the present interest is centered in the immediate future. 

The diversion of the grain trade from New York is illus- 
trated by tlie following table from the Railroad Gazette of 



40 



February 23, showing the percentage of tlie total receipts at 
each port for eleven years : 





o 


Boston. 


New York. 


Philadelphia. 


o 

a 

P5 


S o 
< 


1866 


10.9 

10.3 

7.8 

11.0 

9.7 

10.3 

10.3 

11.4 

9.3 

9.6 

9.0 


11.6 
13.5 
11.0 
10.0 
10.4 

9.6 
10.0 
10.3 

9.3 
10.3 
10.7 


61.2 
55.3 
57.9 
55.0 
55.7 
57.0 
53 4 
53.8 
55.8 
53.3 
45.8 


7.7 
8.8 
11.7 
13.3 
13.3 
13.9 
14.3 
14.3 
13.8 
15.7 
16.8 


8.6 
13.1 
11.6 
11.7 
11.9 
10.3 
13.3 
11.3 
13.9 
13.3 
17.7 


38.8 


1867 


44.7 


1868 

1869 

1870 


43.1 
45.0 
44.3 


1871 


43.0 


1873 


46.6 


1873 ■.. 


47.3 


1874 


44.3 


1875 


47.7 


1876 


54.3 







Notwithstanding the relative decrease, there has been a very 
large actual increase in the receipts at New York ; for while 
our receipts in 1866 were only 58,500,000, they were in 18Y6, 
97,000,000 bushels. In exports of grain, however, while New 
York has increased only 1,000,000 from 1873 to 1876, Phila- 
delphia has risen from less than 5,000,000 to more than 22,- 
000,000, and Baltimore from 9,000,000 to more than 24,000,000 
bushels during the same period. The Gazette goes on to say : 
" The long monoply of exports which New York has enjoyed has made 
it possible to introduce and maintain a rate of taxes for handling, and 
merchants' dues at the terminus, such as would have been impossible 
had the competition of the other ports l)een sharper. It is conceded, we 
believe, that New York takes larger tolls than any other port out of the 
grain exported, and the grain merchants finds it very difiicult to reform 
this. The business is old ; the methods of doing it long established ; a 
large number of influential people are interested in preserving every tax 
on the grain; and there is much greater difficulty in combining to intro- 
duce a reform than wlien the business is comparatively new and abuses 
less firmly rooted." 

This reference to the influence of taxes imposed by those 
handling grain, confirms the view already expressed of the 



41 

power of specific taxation to divert capital and trade. The 
evil complained of is one wliicli will work its own care, al- 
though the interests of the city may first suffer some damage 
as the parties imposing the tax will be the heaviest sufferers in 
consequence. If the city is to retain its proportion of the grain 
trade, charges must be reduced and facilities improved. The 
proposition to widen West street claims as its recommendation 
that it will promote the latter object. Boston is now consid- 
ering a somewhat similar proposition, to bring the ship and 
the cargo together. Important as the grain trade is, and strenu- 
ously as New York should exert herself to retain it, it is a 
still nobler aim to develop all her resources, and strengthen all 
her interests, so as to.be in no considerable degree dependent 
upon any one branch of trade. London has seen Liverpool 
grow with wonderful rapidity, without feeling alarm or suffer- 
ing injury. So, too, may aSTew York, without jealousy, see 
minor cities thrive and prosper, provided always, that care be 
taken to strengthen the position of the city in all its general 
business relations and resources. 

The water-ways of the State, and the proximity of the city 
to the ocean, are advantages no other city possesses combined. 
Montreal may have even superior water-ways, but she is re- 
mote from the sea. Boston is as near the ocean, but enjoys 
no water-ways. Beyond the caprice of railroad managers, 
subject to the vagaries of no corporation, ISTew York has, and 
always will have, cheap and easy access by water to products 
and markets, liable only to the temporary reign of the ice-king. 
This is an unquestionable advantage, only do not let it be made 
the foundation of a presumptuous confidence. Even this 
splendid heritage may be impaired by restrictive legislation 
and bad administration ; and alert and ambitious rivals are 
ready to take, as they have already taken, advantage of such 
errors, through the agency of railways devoted to their re- 
spective interests — neutralizing to a large extent the benefit of 
our water-ways — to the detriment of the commerce of this 

city. 

Debt and taxation are most formidable difficulties with 



42 

which to contend. The enforcement of rigid economy in 
the present condition of affairs will give partial, but im- 
mediate relief. Free trade in money will give ultimate and 
final relief, by retaining and attracting residents with their 
property. If the population of this city were fifty per cent, 
larger than it is, expenses need not in consequence increase in 
any such proportion. Such an accretion ought not to add over 
ten per cent, to the current expenses. This, it is true, has not 
been the experience of the past, for when population has 
doubled expenses have more than doubled. Want of vigilance 
on the part of taxpayers suffered such things to be. The ad- 
dition of twenty, thirty, or fifty per cent, to the population 
would add enormously to the taxable resources of the city, by 
furnishing occupants at fair rents for buildings already com- 
pleted, and requiring the construction of many others. Such 
an addition is possible, nay, certain, provided you will only let 
them come ; and so the rate of taxation would be reduced, and 
the debt would begin to melt away. 

Such an increase in population would also solve the problem 
of rapid transit, for which an imperious necessity w^ould then 
arise. Capital invested in such an enterprise would then feel 
sure of sufficient return ; and the question is always one rather 
of capital than of engineering. 

As to the physical situations of the business of the city in 
the immediate future, they are likely to adhere, in the main, to 
the lines already established, with a constant tendency to up- 
w^ard expansion as the city grows. Much of the river fronts 
will be occupied by warehouses and factories ; the lower por- 
tion of the city by banking rooms and offices for the transac- 
tion of business in all its varied forms of buying and selling 
imports, exports, and commission goods, which need not find 
storage in the office building. The lowxr central portion will 
be the site of such jobbing houses as changed conditions, 
already noticed, permit to remain here. The central portion 
will be occupied by manufacturers of the smaller wares who do 
not value proximity to shipping. The upper central part by 
stores and bazaars of a style to attract, as they now do, visitors 



43 

to the city, and above these the mansions of the affluent, 
flanked nearer the rivers by the dwellings of those who desire 
moderate rents and access on foot to their avocations. The 
annexed district, constituting the upper wards, will be occu- 
pied by families owning their homesteads, having easy and 
cheap access thereto by steam roads ; and the splendid sites on 
the elevated portions will be adorned by elegant mansions and 
villas, adapted to the capabilities of the grades and the tastes of 
opulent owners. 

New York may not in the future be the centre of the jobbing 
trade, for that trade will have many local centres. But as the 
centre of the importing, exporting, commission, and financial 
business of the continent; as the dwelling place 'of the rich, 
the cultured, and the refined ; as the centre of all that is most 
enterprising and progressive in journalism ; as the site of man- 
ufacturing industries ; as possessing shops filled with the choi- 
cest fabrics ; as the home of mechanics and laborers of every 
grade ; as the seat of all that is of exalted interest in science 
and art ; as the situation of the best schools in literature, in 
medicine, and in law ; as offering in her religious temples the 
richest and most solid architecture, and in her pulpits the 
highest and most varied talent ; as presenting in her places of 
amusement attractions* adapted to every taste ; as affording en- 
tertainment of the most alluring character in her hotels ; and as 
a resort for those who travel for business, pleasure, or instruc- 
tion, New York has a magnificent future before her if she can 
be allowed, free and unfettered by artificial restraints, to attain 
it. 

In many respects New York has already attained these excel- 
lences, but when, under the stimulus of free trade in money, 
two million people shall throng her busy streets, her present 
attainments will sink into insignificance as compared with the 
future, if she be allowed to advance with free and elastic step, 
not impeded by the oppressive and repressive influences of ob- 
structive and barbarous laws. 

When her truant sons and daughters— made truant by these 
laws— shall return: when capital shall be welcomed and 



44 



not rejected ; when those who have acquired a competence 
here shall be permitted to remain here to enjoy and diffuse 
its benefits ; when men who have acquired a competence else- 
where shall be permitted to come here to enjoy and diffuse its 
benefits ; then, indeed, a diadem shall deck the brow of this 
queenly city, gemmed with the stars of peaceful conquests. 
Then shall the treasures of the world be made subsidiary to 
her greatness. Then shall this fair city sit enthroned at the 
confluence of the waters which shall bear upon their bosom 
the wealth of nations as her tribute. Then shall her banner 
float over her citadel bearing the legend " Feee Trade in 
Money." And so shall the Future of 'New York be attained. 



But, inquires some cynic, why do you vex the public ear 
with complaint ? Because, sitting as I have been for several 
years with my finger, as it were, upon the patient's pulse, I 
have detected evidence of an enfeebled circulation, that 
arrested development is at hand, and that atrophy may not be 
distant. The cause is artificial. The remedy indicated is 
increased nutriment — in the form of population and personal 
property — without a free circulation of which real estate will 
come to be dry bones. I could not have said less and dis- 
charged my duties as a citizen. I am content to say no more. 

GEO. H. ANDREWS. 
New Yokk, March, 187Y. 



APPENDIX. 



INCONGRUITIES OF THE PRESENT LAWS. 

The following is an extract from an address before the Committee on 
Ways and Means of the Assembly of the State of New York, by Mr. 
Andrews, in October 1874 : 

" The inequalities and incongruities of the law taxing personal property 
may be very well illustrated by a series of contrasts, as follows : 



A has 1100,00 


of imported goods, 


and 


is exem2}i. 


B 


miscellaneous goods, 


" 


taxed. 


C 


goods consigned. 


" 


exemft. 


D 


goods owned. 


" 


taxed. 


E 


goods manufactured in N. J., 


(( 


exempt. 


F 


in city, 


a 


taxed. 


G 


goods for wliich he borrowed 








capital on U. S. Bonds, 


" 


exempt. 


H 


goods which he sold U. S. Bonds 








to pay for, 


" 


taxed. 


I 


in ships plying from this port, but 








registex'ed in Boston, 


" 


exempt. 


J 


in ships plying in the Pacific, but 








registered here. 


n 


taxed. 


K 


in mortgages on N. J. property, int. 
l^aid in Jersey City, and mort'gs. 








deposited there, 


" 


exempt. 


L 


in mortgages on city property, 




taxed. 


M 


money in his pocket. 


" 


exempt. 


N 


bank. 


" 


taxed. 





certf. dep. in Sub-Treasury, 


" 


exempt. 


P 


•' bank. 


" 


taxed. 


Q 


specie in the Assay Office, 


" 


exempt. 


R 


" his safe. 


(( 


taxed. 


S 


check on U. S. Treasury, 


" 


exempt. 


T 


on Ijank, 




taxed. 


U 


Treasury notes. 


" 


exempt. 


V 


Promissory notes. 


" 


taxed. 


w 


of United States Bonds, 




exempt. 


X 


of State or City Bonds, 


" 


taxed. 


Y 


in certf. of indebt. of U. S., 


" 


exemj)t. 


Z 


" '' a corporation. 




taxed. 


"And if the 


alphabet had been longer my statement had been 


stronger. 



46 

" Call you that a system ? Is that just ? Is that equitable ? Should a 
State great in commerce, in agriculture, and in manufactures, continue to 
countenance, and attempt to enforce laws wliicli oi^erate so unequally ? 
Can any man or any Board administer such a medley satisfactorily ? You 
cannot hold fluid in a cask if a stave be missing ; here, a bakers dozen 
are o"one — gone as irrecoverably as the years before the flood." 

PKOPOSED SYSTEM OF TAXATION. 
The following is an extract from a letter addressed to the M^j'or of 
New York in February 1876 : 

" The presentation of some of thefeatures of the tax laws of Pennsylvania 
has not been for the purpose of recommending them as a standard to be fol- 
lowed literally and in detail, but for the purpose of showing tliat that 
o-reat commonwealth, lying contiguous to ours, and closely resemljling it 
in population, area and resources, has ventured to cut loose from traditional 
customs and usages, and successfully adopted methods and systems in 
harmony with the changed conditions of flnancial and business affairs. 

"The vital principle underlying the present system iutliat State is the 
separation or division of the subjects of taxation by and between the 
State and the municipalities. The State selects its objects of taxation, 
and says to the counties : ' I will take these and leave you those.' It is 
an accepted saying that 'if two men ride one horse, one must ride 
behind;' but, physically, as to creatures, and economically, as to tax- 
ation, it has been found more convenient and advantageous for each to 
have a horse of his own. That is the very substance of the proposition I 
respectfully submit. While two ]iowers tax the same object there must 
always be abundant occasion for contention and friction. 

"I do not propose to exempt all personal property from taxation. On 
the contrary, I propose to reach hundreds of millions that now escape, 
and suV)ject all tiiat is taxed to the operation of just and equal laws, to 
be justly and equally administered by the authorities of the State. 

" As to real estate : That I propose to relieve entirely from the burden of 
State taxation and from the inequalities and, perhaps I might say, op- 
pression of State equalization, which, even if made well and fairly, will 
never, to a large portion of the taxpayers, seem to be so made. 

" The suggestions I have to make are briefly these: 

" 1. That all corporations created by or doing business in the State 
shall be assessed Ijy the State Assessors, upon sworn returns, to be sent 
to them in Albany, and the taxes paid directly to the State Treasurer. 

' ' 2. That the taxes shall be fixed upon tlie value of the stock, a per- 
centage upon gross receipts, or in proportion to dividends, including scrip 
and stock dividends, at such rates as will attract capital and yet yield a 
large revenue ; and that the scale of taxation be so adjusted as not to 
call for any deduction for investments in real estate. 



47 



" 3. That discrimination shall be made in tlie rate of taxation upon 
corporations, formed under the general manufacturing law, so as to foster 
sucli interests so far as may be practicable and equitable. 

' ' 4. That if it shall be found necessary to secure ample revenue to the 
State, a license tax, moderate in auKJunt, may be imposed upon certain 
classes of business to be paid to the State. 

"5. That it shall be left to each county to determine, by its local 
Legislature, whether it will tax, for its local purposes, other descriptions 
of personal jiroperty. 

" 6. That real estate be relieved entirely from taxation for State pur- 
poses. 

" 7. That the real estate of corporations shall continue to be taxed 
where situated, as under present laws. 

'■ The first proposition herein stated is leased upon the fact tliat cor- 
porations are the creatures of the State, and are especially accountable 
to the State. The citizen, in his individuality, is older than the State, 
and in some aspects higher than the State, but corporations are neitlier, 
and are utterly subordinate and responsible to the State. Tlie system 
proposed insures uniformity, both in the method of assessment and the 
rate of taxation upon the classes into which corporations may be divided. 
The effect would be to subject to taxation, light though it may be, hun- 
dreds of millions of property whicli cannot be reached by jjrescnt laws. 

" The second proposition is designed to avoid complications as to 
investments in non-taxable securities, such as Government bonds. 

" The object of the third proposition is obvious. It is to make tax- 
ation light upon organizations, the ])urpose of which is to enable several 
men of limited means to form a corporation to do wluit one man of 
large means may and does do. It is in the interest of the poor man and 
favors the co-operative organizations of that class. 

" The fourth proposition is conditional. I do not approve the prin- 
ciple, yet it may be expedient. So urgent, however, is tlie need of im- 
mediate reform in our tax laws, that I would even concur in what I might 
not approve. 

" Of the fifth proposition it may be said that, novel as the plan may 
seem, it has precedents in the legislation of the State. Tliere is some 
personal property which the law now makes taxable in one county and 
exempt in another county. It is a valuable suggestion in the report of 
the State xlssessors tliat, on certain conditions, mortgages should be 
exempt from taxation in New York City. Those conditions may not be 
admissible, but the principle involved in this fifth proposition is practi- 
cally indorsed by that suggestion. The plan proposed recognizes the 
doctrine of what is called 'local option,' and applies it to taxation of 
certain property. The effect would be that the farmers of the interior, 



48 



while i-elieved from tlie State tax ui>on theii* lands, migbo, if they choose, 
have substantially the same basis of personal pi-operty upon which to 
distribute their local taxes, this basis being diminished only by such 
property as the State may take for the purpose of its own taxation, very 
little of which, it is represented, is to be found in the strictly rural 
sections. 

" Of the sixth proposition little need be said. It confers a boon upon 
the landed interest which that interest should be quick to appreciate. 
Tlie present laws for assessing real estate would work well enough when 
the incentive to irregularity is removed, as is proposed, by the lifting of 
the States tax from such property. 

" The seventh proposition explains itself. 

" To formulate tliese suggestions into an effective and practical law 
would be a serious task and call for the exercise of the highest wisdom 
and the most enduring patience. But something must be done. Look 
at the growth of the State in fifty years ; at the changes in the methods 
of business and in the habits of the 2)eople ; at the creation of property 
in new forms ; at the devices in other States, the effect of which is to 
sap the resources of this ; and at the progress made toward reform in 
taxation in adjacent States. 

" Then look at the miserable patches affixed from time to time upon 
the system which was but indifferently adapted to the requirements of 
the State fifty years ago, and say if it is not high time for the State of 
New York to reform her tax laws; to make them equitable, efficient, and 
productive; to cease complaining about evasions which the law now 
provokes and favors ; to let go of that which you cannot hold, and to 
hold that you may hold, but do not, owing to the defects of your laws. 

' ' The germ of the system proposed was presented in the able re})orl 
of Mr. David A. Wells, and Mr. Isaac Sherman has since pressed for 
reform in taxation in a like general direction with singular ability. But 
it needs that a legislator endowed with high courage and rare patience 
shall devote himself to the work of reform. Not patching, but entire 
reconstruction is needed. The hope of obtaining satisfactory results from 
the present broken, shattered, leaky laws, is as vain as it would be to ex- 
pect highly useful returns from the toil of one who 

' Is dropping buckets into empty wells, 
And growing old in drawing nothing up.' 

" No other State has such resources for taxation, and no other has 

suffered its resources to run so uterly to waste for want of judicious 

legislation." 

GEO. H. ANDREWS. 



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